Determine the transaction price for this contract

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Reference no: EM131256124

Nair Corp. enters into a contract with a customer to build an apartment building for $1,000,000. The customer hopes to rent apartments at the beginning of the school year and provides a performance bonus of $150,000 to be paid if the building is ready for rental beginning August 1, 2015. The bonus is reduced by $50,000 each week that completion is delayed. Nair commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes:

Completed by Probability

August 1, 2015 70%

August 8, 2015 20%

August 15, 2015 5 %

After august 15m, 2015 5%

Determine the transaction price for this contract.

Reference no: EM131256124

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